Internet search engines, web-based mail, on-line reference sources, television programming guides, and providers of similar services earn revenue by presenting selectable advertisements. The ads may be directed to any person likely to use the service, or the ads may be targeted to those whose on-line activities indicate interest in a particular type of good or service.
For example, FIG. 1 shows a search engine web page 100 that allows a person to perform a web search. To initiate the search, the person enters a search 102, consisting of one or more search terms, in a search field 104. The person then selects or “clicks” on a search button 106 by directing a pointing device (not shown) to position a cursor 108 over the search button 104 and pressing a button on the pointing device. In this example, the user performs a search 102 consisting of the term “Camera.”
As shown in FIG. 2, the search engine returns a results screen 200 listing links 202 to web pages relevant to the search 102 (FIG. 1). The links 202 are presented and ranked according to their relevance to the search 102. In addition to the links 202, the results screen 200 also includes banner ads 204 and 206 and sponsored links 208, 210, and 212.
Banner ad 204, displayed prominently across the top of results page 200, presents an ad for “BOB'S CAMERA.” Banner ad 206, displayed aside of results screen 200, presents a banner ad for “DISCOUNT CAMERAS.” On another side of results screen 200, a number of sponsored links 208, 210, and 212 are presented, each of which also represents a camera seller or another good or service pertaining to cameras. Pop-up windows (not shown), which present another window over results screen 200, also may be used to present ads.
If the user wants to learn more about or purchase what is described in one of the ads 204 and 206 or sponsored links 208, 210, and 212, the user positions a cursor 214 over the ad or link and selects it. The likelihood of the user selecting an ad increases if the ad concerns a good or service of interest to the user. Thus, it is not a coincidence that the results screen 200 for the user's search 102 (FIG. 1) on the term “Camera” presented advertisements for camera vendors in ads 204 and 206 and sponsored links 208, 210, and 212. An advertiser arranges with service providers for its ads to be presented when a user shows an interest in the advertiser's business.
Typically, advertisers agree to pay the search engine provider either each time one of the advertiser's ads either is presented, or each time one of the advertiser's ads is selected or “clicked” by a user. Presumably, ads are selected by users who wish to evaluate or purchase the advertiser's goods or services. Because an ad may be shown dozens or hundreds of times before a user clicks the ad, advertisers who wish to pay per selection or “per click” will pay a higher unit price than advertisers who choose to pay “per showing” or “per impression.”
Typically, the advertising opportunities, such as ads 204 and 206 and sponsored links 208, 210, and 212, are sold to advertisers by auction. Advertisers submit bids for advertising opportunities that arise, for example, when a user performs a search including one or more terms describing the advertiser's business. In the case of a results page 200 including multiple advertising opportunities in both ads 204 and 206 and sponsored links 208, 210, and 212, multiple advertising opportunities are auctioned for each results page.
The advertisers'bids each include a bid price and an auction budget. The bid price specifies a maximum price an advertiser is willing to pay for an advertising opportunity, and the auction budget specifies a total sum of money the advertiser is willing to spend on ads in a particular auction. More specifically, the bid price includes a “per impression” or “per showing” bid if the advertiser desires or is willing to pay each time one of its advertisements is presented. Alternatively, advertisers may submit bids that include a “per selection” or “per click” bid if the advertiser desires to or is willing to pay each time a user selects one of its advertisements.
Auctioning advertising opportunities according to such conventional means may lead to a number of undesirable results for advertisers. First, an advertiser who presents the highest bid may win all of the advertising opportunities available early in the auction period, but will have its auction budget depleted early in the auction period. Second, conversely, an advertiser who presents a relatively low bid but a large budget may not win any advertising opportunities early in the auction period. Once other advertisers'auction budgets are depleted, the advertiser may win all the available advertising opportunities at the end of the auction period. However, the low-bidding advertiser may be very dissatisfied at having failed to win advertising opportunities until the end of the auction period.
In both of these cases, the advertisers may be dissatisfied and, as a result, may change their bidding practices. The high-bidding advertiser may bid lower, hoping to stretch its auction budget and win a larger number of advertisements. However, if the previous high bidder bids too low, it may win few or no advertising opportunities. On the other hand, the low-bidding advertiser may raise its bid, hoping to win advertising opportunities earlier in the auction. However, with the previous high bidder lowering its bid, the previous low bidder may find its auction budget depleted early during the course of the auction and become dissatisfied for the same reasons as the previous high bidder. As a result, both advertisers may become frustrated by the process, and invest less of their advertising budgets on these advertising opportunities. Even worse, the advertisers may cease bidding on advertising opportunities entirely.
It is a significant problem for advertising providers when advertisers reduce their bids for advertising opportunities, or cease bidding entirely. It would be in the best interest of advertising providers to conduct auctions so that high-bidding advertisers will be able to win advertising opportunities over an extended period of time instead of winning opportunities only early in the auction. Further, it would be in the best interest of advertising providers to ensure that bidders who commit a large auction budget have a better chance to win advertising opportunities. Advertising providers not only want to earn at least a portion of such large budgets, but also want bidders submitting high budgets to be satisfied so that they will not take their advertising business elsewhere.